Tanzania Sees a 28.3 Percent Rise in FDI Inflows From 1.34bn to 1.72bn Us Dollars

Tanzania has experienced a significant surge in Foreign Direct Investment (FDI) inflows, rising by 28.3 percent from USD 1.34 billion in 2023 to USD 1.72 billion in 2024. This growth underscores Tanzania's strengthening position as a key investment destination in Africa. The increase is largely attributed to ongoing legal and regulatory reforms aimed at enhancing the business environment, streamlining investment processes, and offering attractive incentives to both domestic and foreign investors. This article examines the legislative framework, key reforms, and institutional support driving this positive trend, while also highlighting areas that require continued attention from legal professionals and investors.

Tanzania's economic landscape is currently experiencing a notable transformation, marked by a substantial 28.3 percent increase in Foreign Direct Investment (FDI) inflows, reaching USD 1.72 billion in 2024 from USD 1.34 billion in the preceding year. This impressive growth signals a renewed confidence among international investors and solidifies Tanzania's reputation as one of Africa's fastest-growing investment destinations. The surge in capital injection is not merely a statistical anomaly but rather a reflection of deliberate policy shifts and legal reforms implemented by the Tanzanian government to foster a more conducive and predictable investment climate.

This article delves into the legal and regulatory architecture that underpins this positive FDI trajectory. It will explore the pivotal legislative instruments, the institutional mechanisms facilitating investment, and the specific incentives designed to attract and retain foreign capital. For legal practitioners, understanding these developments is crucial for advising clients on navigating Tanzania's evolving investment landscape, identifying opportunities, and mitigating potential risks in this increasingly attractive market.

The foundation of Tanzania's investment regime is primarily enshrined in the Tanzania Investment Act, No. 10 of 2022, which repealed the previous Tanzania Investment Act, No. 26 of 1997. This new Act, complemented by the Tanzania Investment Regulations, 2023, aims to provide a comprehensive and streamlined framework for investment promotion and facilitation. A central pillar of this framework is the Tanzania Investment Centre (TIC), which serves as the principal government agency responsible for coordinating, encouraging, promoting, and facilitating investments.

Historically, Tanzania has undergone significant economic reforms since the mid-1980s, transitioning from a centrally planned economy to a more market-oriented system. This shift has been accompanied by legislative efforts to liberalize trade and investment. Further enhancing its attractiveness, Tanzania has also established Export Processing Zones (EPZs) and Special Economic Zones (SEZs) under the Special Economic Zones Act, 2006, and previously the Export Processing Zones Act, 2002. Notably, the **Tanzania Investment and Special Economic Zones Act, 2025**, has since consolidated the functions of the TIC and the Export Processing Zones Authority (EPZA) into a unified body, the Tanzania Investment and Special Economic Zones Authority (TISEZA), creating a single statute governing both general investment promotion and special economic zones. This institutional consolidation aims to further streamline processes and enhance efficiency for investors.

The recent surge in FDI inflows can be directly linked to several key legal and policy reforms. The Tanzania Investment Act, 2022, has been instrumental in elevating the role of the TIC (now TISEZA) in promoting, facilitating, and coordinating investment. It introduced an integrated electronic system for investment promotion and facilitation, aiming to reduce registration times and synchronize approval processes. The Act also clarified and codified timeframes for certificates of incentives and reduced the minimum investment capital threshold for domestic investors from USD 100,000 to USD 50,000, while maintaining USD 500,000 for foreign investors.

Investment incentives are a significant draw. Tanzania offers a range of fiscal and non-fiscal benefits. Fiscal incentives include import duty and Value Added Tax (VAT) exemptions on capital goods, raw materials, and essential project inputs, reduced import duties, and capital allowances (e.g., 50% in the first year for manufacturing and tourism, 100% for agricultural machinery). Non-fiscal incentives include protection against non-commercial risks, access to land, and guaranteed transfer of net profits, dividends, and proceeds from sales or liquidation. Companies operating within EPZs, for instance, can benefit from a 10-year corporate income tax holiday and exemptions on withholding tax on dividends and interest.

Dispute resolution mechanisms have also seen attention. The Tanzania Investment Act, 2022, guarantees investors protection against nationalization or expropriation, ensuring fair, adequate, and prompt compensation, along with the right to access the courts or arbitration for dispute determination. Tanzania is a member of the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID), providing avenues for international arbitration. However, it is important for practitioners to note past legislative shifts, such as the Public Private Partnership (Amendment) Act, 2018, and the Natural Wealth and Resources Acts of 2017, which previously sought to limit international arbitration in certain sectors, indicating a dynamic policy environment that requires careful monitoring.

Despite these positive reforms, challenges persist. Investors have noted concerns regarding the inconsistent application of tax policies and regulations, bureaucratic inefficiencies leading to delays, and issues related to land acquisition. The full implementation of the Business Environment Improvement Blueprint, which aims to address these regulatory hurdles, remains a critical area for continued focus.

Tanzania's impressive 28.3 percent rise in FDI inflows is a testament to the government's concerted efforts to create a more attractive and predictable investment climate through significant legal and institutional reforms. The enactment of the Tanzania Investment Act, 2022, the establishment of TISEZA as a unified investment authority, and the provision of various fiscal and non-fiscal incentives have collectively contributed to this positive momentum. The commitment to streamlining processes, enhancing investor protection, and offering competitive advantages positions Tanzania favorably on the continent.

For legal practitioners, these developments present both opportunities and responsibilities. It is imperative to maintain a thorough understanding of the **Tanzania Investment Act, 2022**, the **Tanzania Investment Regulations, 2023**, and the newly consolidated framework under the **Tanzania Investment and Special Economic Zones Act, 2025**. Advising clients requires meticulous due diligence on the specific incentives applicable to their projects, the nuances of dispute resolution clauses, and the practical application of regulatory reforms. Practitioners should closely monitor the ongoing implementation of the Business Environment Improvement Blueprint and any further legislative or policy adjustments to ensure clients can fully leverage Tanzania's growing investment potential while navigating its evolving regulatory landscape.